PROBLEM FROM BUDGETING Problem No:1 Turbo Manufacturing plans to produce 20,000 units, 24,000 units, and 30,000 units, respectively, in October, November, and December. Each of these units requires four units of part no. 879, which the company can purchase for $7 each. Turbo has 35,000 units of part no. 879 in stock on September 30. Required: Prepare a direct-material purchases budget for October and November if management desires to maintain an ending raw-material inventory equal to 40% of the following month's production usage. PROBLEM FROM STANDARD COSTING AND VARIANCE ANALYSIS Problem: 2 Cannington Company manufactures a product that has the following standard costs: Direct material: 40 yards at $2.70 per yard $108 Direct labor: 8 hours at 18.00 per hour $144 The following information pertains to July: Direct material purchased: 42500 yards at $2.78 per yard, or $118,150 Direct material used 36,000 yards Direct labor 7,500 hours at $18.30 per hour, or $13,250 Actual completed production 1050 units. Required: Calculate the direct-material price and quantity variances, and the direct- labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable